Investors interested in Financial - Savings and Loan stocks are likely familiar with Banner (BANR) and Heritage Financial (HFWA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Banner and Heritage Financial are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BANR is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BANR currently has a forward P/E ratio of 13.39, while HFWA has a forward P/E of 15.11. We also note that BANR has a PEG ratio of 1.91. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HFWA currently has a PEG ratio of 2.16.
Another notable valuation metric for BANR is its P/B ratio of 1.27. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, HFWA has a P/B of 1.54.
These metrics, and several others, help BANR earn a Value grade of B, while HFWA has been given a Value grade of D.
BANR has seen stronger estimate revision activity and sports more attractive valuation metrics than HFWA, so it seems like value investors will conclude that BANR is the superior option right now.
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Banner Corporation (BANR) : Free Stock Analysis Report
Heritage Financial Corporation (HFWA) : Free Stock Analysis Report
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